2023-08-10 09:30:14
Can the privatization of public companies, although controversial, be the appropriate solution that will make it possible to plug the financial abyss that these companies are?
More and more voices are being raised to call for the State to withdraw from public enterprises. Privatizing, abolishing state monopolies and/or reducing state participation in these companies is the formula advocated by the defenders of “economic efficiency”. One of the main arguments underlying this idea is that the State is a poor manager: its direct intervention in public enterprises would have prevented their proper functioning. Also the prevalence of state monopolies as well as the presence of certain public enterprises in productive and competitive sectors would have multiplied, according to various World Bank reports, the effects of distortion of competition on the market. According to this idea, moreover defended by donors, the State must confine itself, today, to a role of regulation. “In most of our (African) countries, the role of the state in the economy is preponderant, where it often plays a role that should not be its own; the State is an entrepreneur, a banker… it is a player and an arbiter at the same time, whereas it must be a “regulatory” State which encourages private initiative and entrepreneurship, which oversees economic activities, protects the competition, promotes inclusion, particularly financial, gives impetus to innovations that enable competitiveness…”, underlined, on this subject, Ferid Belhaj, Vice-President of the World Bank for the Middle East and North Africa region. North. So, in this context of economic and financial crisis, should we get rid of these loss-making companies that are straining the state budget? Should we consider overhauling their governance models in order to instil a dose of effectiveness and efficiency? It is difficult to settle the question, all the more so since the answer to the dilemma which opposes “non-commercial objectives” and financial balances is part of a delicate balancing act in which public enterprises must engage.
Capitalize on experiences previous
Indeed, it suffices to draw up an inventory of public enterprises to realize that they have become a financial abyss. In 2022, state transfers to public enterprises peaked at 12.4 billion dinars, i.e. 29% of budgetary expenditure and 9.3% of GDP, while their debt vis-à-vis the State reached 8.27 billion dinars in 2021. These figures only emphasize the proven urgency of their reform. Would the solution be to sell off these vulnerable societies? To explore avenues for reflection, we must go back to the end of the 1980s, when Tunisia adopted the structural adjustment program (SAP). Public enterprises suffered losses and accumulated a debt of 3 billion dinars, or 35% of GDP. From 1987, Tunisia undertook to reduce the size of the public sector by restructuring, privatizing and liquidating public enterprises, mostly small and medium-sized enterprises in the textile, tourism and construction sectors. As for large public companies such as the national airline Tunisair and the insurance company Star, their shares were sold on the stock exchange to private investors. 217 public or semi-public companies have been sold since the launch of the privatization program, bringing in some 6 billion dinars to the public treasury, of which approximately 90% is foreign investment. Therefore, the privatization operations made it possible to bring new money to the coffers of the State but also to “provoke an increase in direct foreign investment”, following the example of what happened in the most developing countries, according to World Bank reports. The other side of the coin: some economists rather paint a mixed picture of the results of the privatizations carried out because productive investment has not increased significantly. The issue of public enterprises is therefore a bone of contention between experts and economists. Between those who call for the privatization of companies holding state monopoly in various sectors and/or those operating in competitive sectors and between those who consider that the latter are national jewels that must be preserved, the debate is crystallizing. But one thing is certain, the reform of public enterprises is now one of the economic priorities, to put an end to the financial haemorrhage they have caused. And in all cases, this reform requires a new state shareholder strategy and a strengthening of their governance.
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